Russia’s Invasion of Ukraine Takes Big Bite out of Greece’s Economy

ATHENS – Already rising inflation in Greece will get worse, the trade balance will be hurt and expected growth to rebound from the lingering COVID-19 pandemic will suffer from Russia’s invasion of Ukraine.

The International Monetary Fund that had been one of Greece’s international lenders putting up 326 billion euros ($356 billion) in three bailouts made that assessment, said Kathimerini, estimating it would reduce the Gross Domestic Product (GDP) by 1.1 percent.

That’s compared to 1.5 percent in the Eurozone of the 19 of the 27 European Union member states using the euro as a currency, the IMF also indicating the war will affect most of the world economically.

The global economy is projected to expand by 3.6 percent this year, while the Eurozone will see growth at 2.8 percent and while Greece is expected to have a rate of 3.5 percent it would have been 4.6 percent without the war.

Still, that rate could be driven down further, the paper said, the New Democracy government expected to send a revised estimate to the European Commission, with the country still under economic surveillance.

For 2023, the IMF is forecasting growth in Greece to drop to 2.6 percent, while the medium-term projection through 2027 is 1.2 percent, showing the effects of the pandemic will take longer to recover from, the war in the short-term adding to the difficulties of a comeback.

Greek inflation is anticipated to reach 4.5 percent this year, more than 10 times higher a previous estimate with the report indicating it’s likely already at 5 percent and adding to the costs of everything from fuel to food.

The Eurozone inflation rate is seen at 5.3 percent before falling to 1.3 percent in 2023, mostly due to the comparison with the level in 2022, and settling in at 1.9 percent by 2027.

The deficit of the Greek current account balance is expected to climb to 6.3 percent of GDP this year, the second-worst rate in the Eurozone this year after Cyprus, be 6.1 percent in 2023 and falling to 2.7 percent only by 2027.

The only good news is that unemployment this year is expected to be 12.9 percent, down from a previous forecast of 14.6 percent, lower than during the crunch austerity years from 2010-18, still among the highest in the EU.


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